What is Inner Bar? Trading methods with the Inside Bar pattern

Inside the Bar there Trend continuation pattern In technical analysis, the pattern signals that a trend is about to end, so a new trend is about to occur at reputable forex brokers. The Inside Bar is not very difficult to trade, but there are still some traders, especially new traders, who approach this model incompletely and rigidly, making the application of the Inside Bar ineffective. So let's take a closer look at what the Inside Bar is, as well as how to trade the Inside pattern more effectively.

Inside Bar pattern overview.

The Inside Bar pattern shows that the market is consolidating, both sellers and buyers are decreasing. In order to prepare to push the price to get stronger as expected. After the accumulation process, the price will break out but it doesn't know which direction it will go, the strength of the breakout is strong enough for traders to profit from the pattern.

Inner bar pattern features

The inside bar pattern consists of two or more candles with the first candle having the longest length (calculated from low price to high price), called the mother bar (mother bar), and the following candles are located on the right side. within the length of the parent candle, called the daughter candle or inside bar.

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inner bar
What is the inner bar pattern?
  • All of the following candles are within the range of the first bar (the parent candle). The highest point of the following candles should be below the highest point of the parent candle. The lowest point of the following candles must be above the lowest point of the parent candle
  • The mother candle can be red or it can be green. Sub-candlesticks can also be red or green. But there is still a difference when the color of the candles changes.
  • Each child candle can go outside the range of other candles, but never outside the range of the parent candle.

The meaning of the Inside Bar candle

Unlike other candlestick patterns, the Inside Bar pattern shows that the market is slowing. That is, it cooled down after a strong uptrend or downtrend.

Inner bar appears when volume is low

The most obvious evidence is that market volume will shrink. The Inner Bar will appear on several different timeframes, if this pattern appears on the smaller timeframe, the accuracy will be lower. Because Forex Signals will be very susceptible to interference.

Also, you can see some candlestick patterns on Forex below:

Inside Bar trading methods

The Inside Bar will appear to show price indecision when it encounters some resistance level along the trend. Or it could be that the hesitation came from a period of fairly extensive price rises or falls.

View more: What is support and resistance? How to identify potential support and resistance zones

Trend continuation trading

With the market trending strongly, this pattern is a temporary stop, so the old trend will continue. Therefore, this is an opportunity for those who have not yet noticed and are hesitant to enter the market to take advantage of the existing trend. In a strong uptrend, an effective strategy is to start buying as soon as you see a signal from the Inside Bar. However, only buy in small volume and buy gradually each time the price is low.

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Inside Bar with trend continuation signals

Trade with reversal signals

When in a weakly trending market and encounters strong resistance, the Inside Bar pattern is a reversal signal. Mainly in the following cases:

  • In an uptrend, the parent candle will be a bullish candle, but the daughter candle will be a bearish candle.
  • In a downtrend, the parent candle is a bearish candle, but the daughter candle is a bullish candle.

Let's look at the Insidebar candlestick pattern which is aggregated into a Pin Bar candle as follows:

pin barpin bar
Pin bar candlestick reversal signal

This Pin bar is usually a short-term reversal signal. The probability of a reversal occurring in this case is usually very high. Therefore, you can trade against the current trend.

A few notes when trading the inside bar pattern

  • It is recommended to trade on large timeframes, smaller timeframes are often prone to noisy and inaccurate signals.
  • Trend reversal trading is not really simple, it also relies heavily on the ability to analyze price action. In addition to the ability to identify important price levels (resistance, support), if you are a new trader, you should continue trading with the inside bar and watch out for the reversal signal.
  • A big advantage of this pattern is that the R:R ratio is very good because the stop loss is not too far from the entry point. But, this is also the downside, when trading with the inside bar it is often easy to get a stop loss because the stop loss is very close.
  • Beware of the inside bar (Fakey) false breakout pattern, it is easy for new traders to make a mistake when encountering this pattern.

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Above is all the knowledge about what the Inside Bar is that you need to pay attention to when trading the Inside Bar pattern. This is considered a simple, basic pattern, not special patterns such as those that break the retracement, ascending, descending and failing pressure zone. Traders should note that when trading with simple patterns, there must be other strong conditions on the market situation to provide additional support in order to increase the win.

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